440-4        DETERMINING THE HOUSEHOLD’S MONTHLY INCOME

 

For non-SSI recipients, a household’s eligibility and benefits are determined by estimating the income the household already received and can reasonably expect to receive.  Income is estimated by making a reasonable guess based on the information available from the household and source of income.  The caseworker reviews the income received in the past and current months from the available information and considers, with input from the household and source of the income, what income is likely to be received during the remainder of the current month and in the subsequent month.

 

Income is not counted if the amount of the income cannot be estimated or it cannot be reasonably anticipated when the income will be received.  This type of income may come from sources such as bingo or pull-tabs, or may be earned or unearned income that is unpredictable and cannot reasonably be anticipated to recur.

 

To determine the household’s estimated monthly income, the caseworker must know:

 

 

 

 

 

 

The estimated income amount used will be considered correct if:

 

 

 

 

 

Once the caseworker estimates a household’s monthly income, adjustments to the income estimate are made when a change is reported that affects the amount of income the individual expects to receive.

 

In most cases, the caseworker will estimate the monthly income by calculating an average payment based on recent payments and multiplying this average by the number of payments expected in the month.

 

440-4 A.   CALCULATING AN AVERAGE PAYMENT

 

A caseworker will calculate an average payment when there are known payment amounts from a source, the payment amounts vary, and the frequency of payment is expected to remain about the same.  To calculate an average payment amount, add together recent payments from the same source and divide this total by the number of payments.  To do this calculation use recent payments that represent what is likely to be received, including actual payments already received in the month.  Payments that do not represent a regular payment may be excluded in the calculation, for example, one-time overtime or an increase or decrease in hours that is not expected to continue.

 

Example:

Debra is employed as a housecleaner at a motel, and works varying hours depending on how many rooms were rented the previous night.  She is paid twice a month and provides her last three pay stubs, showing gross earnings of $600 on March 20th, $585 on April 5th, and $660 on April 20th.  Neither Debra nor her employer is able to predict how many hours she will work in a coming pay period, but both agree that her expected income will be about the same as her past earnings.  Calculate an average payment by adding the pay amounts together and dividing by three ($600 + 585 + 660 = $1845 divided by 3 pay periods = $615).

 

440-4 B.   CONVERSION FACTORS

 

1. Conversion factors are used

 

Conversion factors are used to convert income to monthly amounts when the individual is paid on a weekly or bi-weekly basis and the individual received or expects to receive a full month’s income.

 

 

 

2. Conversion factors are not used:

 

 

3. Conversion factors are not needed

 

Conversion factors are not needed when the individual is paid in a single monthly payment or twice a month.

 

 

 

440-4 C.   ESTIMATING A FULL MONTH’S INCOME

 

1. Payment Amounts Do Not Vary

 

When the individual will receive a full month’s income from a source and the payment amount does not vary, estimate the monthly income by multiplying the payment amount by the number of payments expected in the month.

 

Example #1:

Jim applies on April 4 and is interviewed on April 7.  His only income is unemployment benefits of $200 every two weeks.  For April, he’ll get two payments on April 8 and April 22.  He’ll receive a full month’s income in April and expects a full month’s income in May.  Estimate April’s income by multiplying his bi-weekly payment of $200 by the bi-weekly conversion factor of 2.15 ($200 x 2.15 = $430) and count $430 for April and subsequent months.  If using converted income results in the household exceeding the income limit for Family Medicaid, recalculate the monthly income using only two bi-weekly payments ($200 x 2 = $400) to determine Medicaid eligibility.

 

Example #2:

Joan applies on March 28th and is interviewed on April 2nd.   She receives weekly worker’s compensation checks of $250, and provides verification of her March payments received on the 1st, 8th, 15th, 22nd, and 29th. Her next check will be received on April 5th.  She received a full month’s income in March and expects a full month’s income in April. Estimate the income by multiplying the weekly payment by the weekly conversion factor 4.3 ($250 x 4.3 = $1075.)  Count $1075 income for March, April, and subsequent months.  If using converted income results in the household exceeding the income limit for Family Medicaid, recalculate the monthly income using only four weekly payments ($250 x 4 = $1000) to determine Medicaid eligibility.

 

2. Payment Amounts Vary

 

When the individual will receive a full month’s income from the source and the payment amounts vary, calculate an average payment amount by adding together payments from the same source and dividing this total by the number of payments.  Then estimate the monthly income by multiplying the average payment amount by the number of payments expected in the month.

 

Example #1:

Ron applies on May 7 and is interviewed on May 10.  Ron has been working a part-time job since February and gets paid every other Friday.  He’ll receive two checks in May – on May 14 and May 28.  He provides three pay stubs showing he grossed $350 April 2, $325 April 16, and $360 April 30.  Estimate May’s income by calculating an average paycheck.  ($350 + $325 + $360 = $1035 divided by 3 = $345)  Multiply this average check by the bi-weekly conversion factor 2.15, since he gets paid every two weeks ($345 x 2.15 = $741.75).  Count $741.75 monthly income from this job for May and for the subsequent months.  If using converted income results in the household exceeding the income limit for Family Medicaid, recalculate the monthly income using only two bi-weekly payments ($345 x 2 = $690) to determine Medicaid eligibility.

 

Example #2:

Carolyn applies on September 15th and is interviewed on September 19th.  She works at the video store about 20 hours a week at $8.00 an hour.  She gets paid on the 5th and 20th of each month.  Her August 5th check was $320, her August 20th check was $336, and her September 5th check was $352.  Estimate September’s income by calculating an average paycheck.  ($320 + $336 + $352 = $1008 divided by 3 = $336)  Multiply this average check by 2, since she is paid twice a month.  ($336 x 2 = $672)  Count $672 for September and for the subsequent months.

 

3. Estimating New Earned income

 

When an individual starts a new job and will receive a full month’s income, initially estimate the monthly income by using the individual’s anticipated work schedule and hourly rate of pay.  Multiply the hourly rate of pay by the number of hours the individual is expected to work per week.  Multiply this estimated weekly wage by the weekly conversion factor 4.3 to get an estimated monthly amount.

 

At review, determine a new income estimate by calculating an average payment using recent payments.
 

 

Example:

Kathy applies on July 10th.  She started a new job on July 5th, and will get her first paycheck on July 20th.  She gets paid by the hour and paydays are on the 5th and 20th.   The employer verifies that she will work an average of 30 hours per week at $7 per hour.  She will receive a partial month’s income in July, and a full month’s income beginning August.  For July, use the income she is expected to receive in July based on scheduled hours, pay period end dates and pay dates.  For August and subsequent months, estimate the income by calculating a weekly wage (30 hours x $7 = $210) and applying the weekly conversion factor of 4.3 ($210 x 4.3 = $903). If using converted income results in the household exceeding the income limit for Family Medicaid, recalculate the monthly income using only four weekly payments ($210 x 4 = $840) to determine Medicaid eligibility.

 

4. Estimating Earned Income that has Changed

 

When the individual will receive a full month’s income and the rate of pay has changed but the number of hours is expected to remain about the same, estimate the monthly income by calculating the average number of hours per pay period using paychecks already received and multiplying this average number of hours by the new hourly rate.  

 

Example:

Terri reports she got a raise to $10 an hour starting July 1.  She gets paid twice a month, and provides her last three pay stubs that show 45 hours for pay period ending May 31, 36 hours for pay period ending June 15, and 42 hours for pay period ending June 30.  Average the number of hours by adding them together and dividing by three.  (45 + 36 + 42 = 123 divided by 3 = 41).  Multiply this average number of hours by the new rate of pay to get an average payment per pay period (41 hours x $10/hour = $410).  

 

5. Change in Income Occurs During the Month

 

When a change occurs during a month and the individual will get a full month’s income, calculate an average payment using the amounts received and expected to be received in the month.  Then, multiply this average payment by the number of payments expected in the month to get an estimated monthly income for this month.

 

Example:

Yvonne applies for assistance on June 17th.  She started a job on May 16th, works 40 hours a week, and is paid every other Friday.  She was paid a training wage of $8.00/hour for the first two weeks.  Since May 28th, she is now being paid $12.00/hour.  Her first check received June 10th for pay period ending May 27th was 40 hours x 2 weeks x $8.00/hour = $640.  Her June 24th check for pay period ending June 10th will be 40 hours x 2 weeks x $12.00/hour = $960.

Since June income will include pay at two different rates, June’s income is estimated by calculating an average payment using the $640 received June 10, and the $960 expected on the June 24th check, $640 + $960 = $1600 divided by 2 = $800.  Multiply this average payment by the appropriate conversion factor, $800 x 2.15 =$1720.  For July, estimate the income using only the higher rate of pay, $960 x 2.15 = $2064.  If using converted income results in the family exceeding the income limit for Family Medicaid, the monthly income is recalculated using only two bi-weekly payments to determine Medicaid eligibility.

 

6. Estimating Salary Income

 

When an individual receives a salary and will receive a full month’s income, estimate the monthly income based on the monthly salary the individual expects to receive.

 

Example:

Jon works for the State of Alaska and receives a salary of $1000 twice a month.  Calculate his monthly earnings by multiplying his salary by two ($1,000 x 2 = $2,000) and count $2,000 gross earned income from this job.

 

440-4 D.   ESTIMATING A PARTIAL MONTH’S INCOME

 

When a household's income from a source begins or ends, it may be necessary to estimate a partial month’s income.  For these situations, do not use conversion factors to estimate the income.

 

If the household receives or expects to receive a partial month’s income from a source in a month, estimate the income by totaling the actual income received and the income the household expects to receive in the month.

 

Example – Beginning Income in Month of Application:

Maria applies on June 25.  She just began receiving weekly unemployment benefits of $100 and will receive a $200 check every two weeks.  She received her first check of $200 on June 18.  Her next check will be received July 2.  Count $200 unemployment benefits for the month of June.  Since she will receive a full month’s income in July, estimate July’s and subsequent months income using the 2.15 bi-weekly conversion factor ($200 x 2.15 = $430) and count $430 for July and subsequent months. If using converted income results in the household exceeding the income limit for Family Medicaid, recalculate the monthly income using only two bi-weekly payments ($200 x 2 = $400) to determine Medicaid eligibility.

 

Example – Beginning Income in Ongoing Case:

Char reports on February 7th that she will start receiving bi-weekly payments from an annuity.  She will receive her first payment March 18th.  This will be the only check received in March.  Determine eligibility for March counting the one payment she will receive on March 18th.  Since she will receive a full month’s income in April, estimate April’s and subsequent months income by multiplying the bi-weekly payment by the 2.15 conversion factor.  If using converted income results in the household exceeding the income limit for Family Medicaid, recalculate the monthly income using only two bi-weekly payments to determine Medicaid eligibility.

 

Example – Ending Income in Month of Application:

Clarissa applies on August 13 and is interviewed the same day.  She received her last unemployment benefit check of $200 on August 6.  Count $200 income for August.  Since she will no longer receive benefits, no unemployment income is counted for September.

 

Example – Ending Income in Ongoing Case:

Kevin reports on September 3 that his seasonal job will end in September.  The final check from this source will be received in October.  The anticipated actual amount of the final check is estimated for October.

 

Example – Income Changing During the Month:

Venietia applies for assistance on June 16, and reports that she has a job that pays twice a month.  She provides paychecks showing that she was paid $500 on May 10 and $600 on May 25.  However during the last half of May, she had to take some time off without pay due to an illness in the family and so did not receive a paycheck on June 10.  She returned to work on June 1 at her regular pay and expects to be paid $550 on June 25.

Since Venietia will not receive a full month’s pay during June, this is considered to be a partial month’s income.  The income for June is estimated by calculating the amount that she will receive on the June 25 paycheck.  Income for July will be estimated based on a full month's income.

 

440-4 E.   IRREGULAR INCOME

 

An individual may receive income on an irregular basis.  Examples of irregular income may include day labor, on-call work such as substitute teaching, craft sales, and receipt of spousal support.  Irregular income is counted if the household has already received it in the month or can reasonably expect it to be received in the month.  Income that cannot be reasonably anticipated is not included in the estimate of income.

 

The caseworker should thoroughly explore irregular income situations. When the caseworker and the individual can arrive at a reasonable estimate of how much income will be received in a month, that amount of income is included in the estimate.

 

Example of Countable Irregular Income:

Terry received spousal support during four of the last six months - $100 in February, $200 in April, $50 in May and $250 in July.  Totaling the four payments ($600) and dividing them over the six-month period the payments were received, the household received an average payment of $100.   The caseworker discusses this with Terry and both agree it would be reasonable to expect an average $100 per month.

 

Example of Countable Irregular Income:

Aina creates and sells craft items and a craft store carries the items on consignment.  She receives income only after an item is sold.  Sales are irregular most of the year.  However, during the summer tourist season, sales pick up.  After paying expenses, she normally receives between $300 and $500 per month from June - September.  Based on this previous sales history, the caseworker estimates Aina will receive $400/month from craft sales during the months of June - September. Sales are extremely sporadic during the rest of the year so no income is anticipated from this source from October - May.  If Aina states that although sales are irregular during the off-season, she usually receives at least $50 a month, $50 would be counted each month from October - May.  If she states that income for most months is completely unpredictable except around Christmas, the caseworker would explore the anticipated income from Christmas sales, and include that amount in the estimate of income for December.

 

Note:  

The example above describes a self-employment situation.  Please see manual section 441-1D for policy on self-employment income.

 

Example of Excluded irregular Income:

JoLynn applies for assistance in December.  She most recently received a spousal support check in November.  Prior to that, the last check she received was in May.  She tells the caseworker that she can never predict when the checks will arrive.  In this case, payments cannot be reasonably anticipated so no spousal support income is counted.

 

Example of Excluded Irregular Income:

Dave applies for assistance on November 5th.  He works on-call for the city shoveling snow during the winter, but has not worked nor received any income in November.  Since it cannot be reasonably anticipated when snow will fall, when he will be called into work, or when income from this source will be received, income from this source cannot be included in the estimate of income.

 

440-4 F.   SELF-EMPLOYMENT INCOME

 

For policy on determining self-employment income, see manual section 441-1D.

 

440-4 G.   VERIFICATION OF INCOME

 

All countable income available to the household must be verified.  Verification obtained must be documented in the case record.  Income can be verified using check stubs, written or oral statements from the source, or data interface information.

 

Pay stubs are the primary source of verification for earned income.  Occasionally pay stubs are not available.  The individual may have just begun work and have no pay stubs, or may have lost some or all of the stubs.  In these circumstances, verification of the individual’s income is obtained from the employer, either by phone or a work statement completed by the employer.

 

Note:  

At review, determine a new income estimate by calculating an average payment using recent payment if income was initially estimated and verified using a work schedule.

 

440-4 H.   DOCUMENTATION

 

Good documentation is an essential part of establishing how the household's eligibility was determined.  In every situation, the caseworker must document:

 

 

 

 

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MC #11 (9/05)